tv Rob Black and Your Money KRON July 8, 2013 11:00am-11:31am PDT
>> that was an under employed as this is sick and the unemployment jobs report. another loser on today's list of winners and losers, mortgage rates. in the last two months we have seen the treasury note john. it down from the 16 load to the 24, 25, 26, 27. goldman sacks report basically said it expect the tenure treasure to be at 4%. it will start
trending higher. this is important because you might own a home and want it to increase in value. it is tough if the interest rates continued to climb higher. there are some winners and the real-estate market but we'll talk about that later. despicable me, the movie. universal as a huge it hit and despicable me to. what is interesting to note about this is that it pulln 140 million on its opening weekend. comcast universal, loan arranger for disney. they had power house monster smashes at the lone ranger was a obama.bomb. the minions wl
have a movie coming out next year. and the murray won at wimbledon this weekend. he became the first brit to win and 70 + years. he increased his earnings potential probably buy an extra $20 million a year. he has won two grand slam events, last year's u.s. open and this year's wimbledon. he gets closer to fetter who novels and $70 million a year. he increase his value by winning. you need to think that way as an investor. does take a look at what you should be doing in your 20s. one of the biggest questions that i have thrown at me, where should i be? we'll do a top-10 list of commands you want to start planning.
you want to start coming up with i need a million dollars suit give me $40,000 a year when i retire. you want to live within your means. i took a lot oof vacations in my 20s that i did not have to take. they off your credit card debt, could that like mortgages and that bad debt like credit cards. you can't earn 18% more a year so why pay more for things that you are buying that you may or may not need. start paying off your credit card debt. it is problematic for a lot of people. next up, start investing. you'll buy high and sell low and make mistakes. get those out of the way in your 20s so you can have a better run at money on retirement in your twenties and forties. ished a gt scored to get a cheaper house and cheaper mortgage.
it means you get to max out your 401k. take to vacations later in life. don't let your kids go out and be pochard majors. have something that is marketable. if you don't, you spend your way through high school and college and you don't really get the job done. consider going back to school. use of time. next up, stand on your on. cut the umbilical cord from their parents. a lot of people have a tough time doing this. it helps you understand money and the process of investing in making mistakes early in life. mary wisely. i did not, it cost me. that divorce is expensive and that hurts people. consider slowing things down. don't go out into a big wedding. hello when you decide to marry in your 20s. i think you'll find that all of your friends, you'll have a lot of coming year 30's. the
next one up and have some fun. i am pretty hard-core about retirement but you do want to have some fun. un to enjoy your 20s because later life things will get a little more expensive on you. coming up in the show i will talk about a bond expert. a lot of people not know what bonds are. we'll be talking about what needs to be known in the bond market. give us a call or e- mail me at rob black .com. male narrator: male narrator: mattress discounters' $197 mattress sale is on now. dog: mattress discounters' $197 mattress sale? male narrator: right now, you can get a serta mattress, any size, for just $197 each piece when you buy the complete set. dog: any size mattress, twin, full, queen or king, for one low price. and they'll deliver it free! male narrator: the $197 mattress sale... dog: oh, boy! male narrator: ...is on now. ♪
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is a bind? >> a loan between issuer and a lender. the lenders often the investor. it has reached a peak components besides interest rate and maturity. an investor wants to analyze what is the issuer's ability to pay the bill. these bonds generally finance capital improvements such as property, equipment, inventory. anything along the lines to help the issuer was some sort of objective. >> what is the difference between an individual bond and bond fund. >> individual bond has an interest rate and maturity that is set for life of the bonds. a lot bond fund is a compilation of underlying securities that set a certain investment executive. bond funds are subject to a net asset value or the value of the fund at the end of the day. this is based on underlying assets but could be manipulated by other things such as large investor outflows very bonds
are basically ious issued to a government or corporation. the basic concepts. >> was there is between a yield and a coupon? >> the coupon is a set rate of return said the investor will get based on the total principal invested. a yield reflective of the price you pay of the bond. a bond prices a percentage of the total par value of the amount of standing of the bond. when you take the price of that, a percentage you divide that by the coup by that is how you get the yield varies based on the price you pay you have the current market rates. >> said investors worry about credit ratings? how does that affect bond holders? >> credit ratings are great start for to analyze a bond in assets see it as you to pay the bill. we've heard a few things were they have erred a little bit. and our practice the is a credit rating agency as a nice bass
line and starting point for a bind. we die than a lot deeper to understand the ability to pay the bills in the future. bond ratings are more flexible in the past. >> i look at the 10 year treasury bond that the government is you bind and it has recently spike. how has that affected your industry? >> we a seen a big market sellout across the board. there's an interesting relationship between price and yield. as deal goes up prices go down. this historic flavor fax inflationary expectations. in place as running between 1.4 quantitative easing program buys 85 billion a month worth of mortgage and treasury securities. at by doing that, they drive
prices up and based on the relationship between price yields, it makes yields fall. this keeps interest rates low and impact its interest rate sensitive environments or markets such as housing. as we're seeing rates increase, that is largely due to the risk that the fed may reduce this by a buying program. >> we have seen the bond funds hit pretty aggressively in the past few months. do expect these to continue to lose some of their value? >> that is the $100 million question right there. i think personally that the bond sell-off has gone a little too far. on may 21st ben bernanke had some remarks and then he had a question and answer session where said market that is the implied they may begin to bring by year end. it could impact the purchases by the end of next year. we saw the market reacts to
that very quickly and saw bit of a tailspin. i see bond prices fall too far too fast and we're seeing some of the best values we have seen in two to three years particularly in the tax reusable bond market. >> we will keep you around for another segment and get a little bit more information from him. you can find out more at alamo capital, vice president of investment information at aloe capital .com. they have been around for a long time and great service in with guns. we'll be right back and you can always e-mail me at rob black .com. we will be right back.
and your money. during the again is billy small from alamo capital. if you want to call the show pick up the phone,415 561 8753 or drop me an e-mail at rob black dot com. our interest rates affected about market? >> securities being issued. some have the sixth option were some are variable rates. a fixed rate, yet this same rate return for the life of your lawn. with variable rates we see those shoot up quite a bit recently due to be fed action to the rest of their tafavoring their programs at the end of the year. the people of the variable rate
are getting hit with much higher costs. >> speaking of a higher cost, of who should own the bonds? what i was growing up it was something old people all that because they like the security of them. >> bonds are critical for investors to love and come. the like having that regular consistent cash flow based on underlying security? bonds salt that need. classically portfolio is composed of 60% equity, 40% fixed income. that varies based of the a time, risk and objectives. by having a fixed income component and equity component, that is a nice solution to minimize voluntary. >> bonds have been thought of as safety, you get your in come. it does not always work out like that. standard
audio and its right have had some minor problems. >> that's when the need to get down to the credit analysis of the issuers. issuer's ability to pay the bills. you get a lot of the obligations. lars obligation it is expenses. health care, up untipension obligations. most issuers are doing an excellent job at paring back expenses and finding revenue. over the last year we have seen at revenues rebound from lows of 2009 to 2010 your missile issuers or doing far better. if you factor in the tax rates for a seen the state income-tax rates increase and the federal tax rates increase and the affordable aicare act another 3% for the top
earners. that makes tax minutes of the bonds of the greater. >> municipal is also known as a muni bond. they give you a coupon, they give you a yield on your money and you pay back over time as the concept. i always say there's a big difference between a paula autobahn and a stock and bond. that is something that our listeners and viewers should pay attention to. palo alto will probably find every issue that comes through. stockton, not a lot of jobs that come through. kenny played a difference of cities? >> economic feasibility continues to exist. not every good day is a great bond. not every bad name is a bad bond. but give the security behind the line. water bonds up finance water improvements for the water, wastewater sewer system. those are secured by the net
revenues of underlying enterprise. city bonds by the general fund may not be paying right now over the water bonds perrin secured bonds are making regular payments because of this restricted line of revenues securing those very paulo alto has a great cast well, a really strong property tax base. those bonds are generally perceived as safer. it is critical to understand the underlying cash flows that securities bonds a major there is nothing that can really and here that there. we have general obligation bonds that are secured by property taxes. to contrast a certificate of participation and lease revenue bonds that are secured by the general fund on a parity basis with all other creditors of a city.
the appropriation of those bonds is generally perceived as unconditional. stockton in san bernadine else certainly brought that into question. >> i like bonds, there is source of income other than my job. billy small is with alamo capital you confine him on line at alamo capital .com. member get to call the show or drop me an e-mail at rob black .com.
steve. what is your question? >> first of all i really enjoy your program. i live have a lot of bodies of water stored the light that i had some gain on. they are 4 1/2 to 5%, i am in my sixties and have a fixed income. are those good to keep holding? >> he has lost a little bit of principal equity recently. >> essential service bonds secured by the net revenues of the underlying enterprise and generally have a break cabinet that allows issuers to raise rates to pay the debt service. at 4 1/2 to 5 percent, at my opinion that return is very fair ball particularly for investors in the 6270 year old age group. by having that secured line of revenue,
you're not necessarily on the same basis as health- care and pension that are little bit difficult to analyze. you're a secured by that revenue that is going straight to your bond holders. they have the ability to raise rates at. >> thank you very much that is billy small that you can reach at alamo capital .com. >> what is the biggest stock mistake you made? >> i bought a medical device company not knowing that the medical revenue is not there and companies that do not have a lot of product. the big guns have prodded to fall back on, the small ones do not. the revenue that i did see showed me was something that i should not have bought. laid out once to know what do i think of annuities? 99
percent of annuities are inappropriate for investors. they're sold by insurance companies that have an insurance component as well as investing component. if interest rates were a lot higher you could make a case for a fixed in, or a fixed rate or a return in your retirement portfolio. i would use a low commission, los c type of firm. i would not think to use an insurance broker it will just get you into trouble. annuities have a lot of commissions. if you get a pension of $500,000 you could make a broker $45,000 in commissions just like that would buying products that you don't really need. do not ensure which you can'annuities are not a good product for most investors. reggie ask our gold coins a good idea? again, something with mass of profit margins and they run a lot of advertising. they plot
their worst case of fears of the economy is going to hack and a hand basket. gold coins and have typically 30% market when you buy them and sell them. they're not very liquid. if the economic downturn hits you will want to have a shotgun instead of gold. the lower end of gold is cute but it does not have against inflation. that is when you're wealthy, not when you're poor. not to create wealth, it is a wealth protector. we are out of time and i would like to think bill's the mall from alamo capital. if you have any further questions e-mail me at rob black dot com. [ man ] we have a go for auto sequence start.
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real estate experts agree there is truly one room in the house were a renovation can not only add beauty but actual value to your home. that is the bathroom. in this episode of bay area living, home improvement the best way to renovate your bathroom without the hassle or stress normally associated with renovation. >> one of the biggest hassles of a bathroom remodel is finding all the materials and fixtures in it. it does not have to be like that. i am here at the beautiful rebath show room